UPDATE: As noted above, the new update is now on the AppStore, so you shouldn't run into any problems. Still feel free to drop me a line with feedback though :-)

Yep. Disabling the music is the key. Unfortunately you can't just turn the volume down (as it's still playing, just silently) but if you start one of your own tracks in the iPod, then it will leave that running, (ignoring our soundtrack) and the play will be smooth :-)